From the perspective of "competition", deals of this sort make me a touch nervous.

It could be largely benign: "Company that makes devices incapable of playing PC level games sees potential in service that would change that, doesn't want it to die, does want to profit if it succeeds".

However, the cellphone market is a bundling-riddled hellhole. Hardware exclusives are used to drive service subscriptions, certain carriers obtain "content exclusives", etc, etc. Seeing an "OnLive Go: Only from HTC" sticker in the near future would, let's say, entirely fail to surprise me.

That may well light a fire under some of the on-device game producers, and the device makers whose hardware capabilities they depend on(though those already seem to be moving about as fast as the, quite competitive, ARM SoC market can carry them); but a deal between a handset maker and a potential handset content publisher is unlikely to aid competition much(particularly if OnLive has any juicy patents over important parts of their comparatively low-latency streaming stuff...)

The situation it looks most similar to, to me, is when Microsoft or Sony eat an independent game developer in order to obtain an exclusive for their respective console. The amounts they are willing to pay to do so are certainly indicative of competition; but competition of a sort that is basically just a pain in the ass for buyers: many games are simply unavailable on one platform or the other, and those prices being paid then have to be ground out of the install base that they help generate...